Government and Markets

This essay is a review of a lecture delivered by Mr. Spitzer, the former governor of New York, at Harvard University’s Edmund J. Safra Foundation Center for Ethics on November 12, 2009. As New York State Attorney General from 1998 to 2006, Mr. Eliot Spitzer successfully engaged in prosecuting corporate crime, including stock price inflation, securities fraud, and predatory lending practices. As one of his best experiences, Mr. Spitzer addressed how government ought to intervene in the workings of the market. Mr. Spitzer lectured on what are the reasons that government intervention is needed in the market, one, to reassurance of transparency to safeguard against the market's unfair basis such as discrimination too, to improve corporate governance to require businesses to be responsible for their hazardous behavior. Mr. Spitzer addressed that a necessary proposal for the appropriate rule of government in the market is needed to rebuild public trust on government so genuine transformation is possible. Mr. Spitzer addressed the American International Group (AIG) and the financial bailout. I agree with what Mr. Spitzer stated that why would we invest in AIG? Mr. Spitzer stated that: "Think about it. AIG was a worthless shell. Anybody would say: “I’m giving you, as a candidate, a check for $12.9 billion; you’re running around and giving the check to Goldman? I want stock in Goldman. I don’t want stock in a worthless shell.” The Fed and the Treasury didn’t consider that possibility. I don’t know why, but it returns us to the question of who pays. The taxpayer pocketed up the whole ball. That was wrong" (Fox TV, 2009). The question is raised why would any individual let our government want to invest in a failing business? AIG did benefit from government intervention in the TARP policies because our government stated that banks were "too big to fail" and was afraid that if the banks fail that would cause a plunging recession. However, the Troubled Asset Relief Program (TARP) money that AIG received was basically paid for the CEO's bonuses was reported on letter after an investigation (Fox TV, 2009), AIG's action seems to send the message that two banks can take all the risks they liked, any loss will be covered by the taxpayer. Businesses need to hold accountable for the risk and poor and unnecessary business choices.